The Anderson Company estimates that total manufacturing overhead for the year will be
$15,000,000 and total machine hours will be 200,000 hours. However, the actual
manufacturing overhead is $8,000,000 and the actual machine hours are 100,000 hours. If
the company uses a predetermined overhead rate based on machine hours for applying
overhead, what is the predetermined overhead rate?
Predetermined overhead rate
= estimated manufacturing overheads ÷ estimated total machine hours
= $ 15000000 ÷ 200000
= $ 75 per machine hour
Thus the correct answer is $ 75 per machine hour
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